Gap Is Still In Bad Shape After Scrapping Old Navy Spinoff

Gap (NYSE: GPS) was caught between the proverbial rock and a hard place. Having agreed to spinoff the Old Navy chain to help it raise cash to pay down its heavy debt load, the jeans and khaki retailer was forced to call off the transaction as the discount store's business spiraled downward.

If Gap had stayed the course, the spinoff would likely have been a failure as stumbling businesses don't excite investors, and it wouldn't have raised enough money to pay the underwriters and its debt. But canceling it means it still has its debt load, and it's stuck with an ailing retailer it must now rehabilitate.

Image source: Gap.

Source Fool.com